| These Hated Stocks Are Setting Up for a Powerful Rally | | By Ross Hendricks | | Wednesday, December 13, 2017 |
| Imagine the surge in oil prices if Saudi Arabia shut off 100% of its production... followed by a complete shutdown in Iraq.
That's effectively what just happened in one corner of the market... And it's one of the most bullish signals I've ever seen in commodities. Investors buying today could make a fortune in the years ahead.
Let me explain...
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Two of the world's top producers just agreed to take a huge chunk of annual global uranium production off the market...
Early last month, news hit that uranium miner Cameco's (CCJ) McArthur River mine – responsible for around 10% of global supply – will shut down for most of next year, starting in January. Then, last week, leading global uranium producer Kazatomprom announced a 20% production cut for three years.
In total, these two cuts will remove more than 16% of uranium production from the market, starting in January.
That may not sound like a lot. But this change is big news...
You see, it typically only takes a couple of percentage points of global shortage or excess to cause massive price swings in commodities. For example, this year's OPEC production cut amounted to less than 2% of the total global oil supply. And most OPEC production cuts have historically taken between 2% and 6% out of the global supply.
Each time, these small production-cut percentages balanced the market and sparked huge price gains. That's why this setup is so promising.
Not only that, but uranium stocks have been left for dead. World-class miners have seen their stocks crushed in recent years. And that could lead to big gains when the market recovers.
Take a look at what has happened to uranium stocks since 2011...
Over the past seven years or so, uranium stocks have plunged nearly 90%.
Carnage like this is rare... But we've seen similar situations before. Early last year, coal stocks looked a lot like uranium stocks today – with 90% declines from their April 2011 peak.
Then, as capacity came off line and supply decreased, coal stocks rallied by 187%. Take a look...
And that was in a dying industry. We could be setting up for an even stronger rally in uranium... because uranium is still a growth market.
Demand for electricity is on the rise in Asia. The two most populous countries in the world – China and India – each view nuclear power as a much-needed source of cheap, clean fuel. According to the World Nuclear Association, China plans to increase its nuclear capacity 70% from last year by 2021.
Globally, the International Atomic Energy Agency projects a 123% rise in nuclear capacity by 2050.
Combine future demand with a major supply reduction, and we have the ingredients for a powerful bull market. Even if uranium stocks make up only a fraction of their decline since 2011, investors could see gains of 100%, 200%, or more.
The market is already responding to the production cuts. Since Cameco's announcement a month ago, the Global X Uranium Fund (URA) has leapt up around 30%.
That's a lot... But this is still just the beginning. Commodities markets play out over years and decades – not weeks and months.
Investors who buy in now can still make big profits. And URA is an easy way to take advantage of the opportunity.
Good investing,
Ross Hendricks |
Further Reading:
"What happens next is Economics 101," Steve says. He shares how supply and demand are driving another kind of boom today – and why he believes we have years of upside before it ends. Learn more here. "Many commodity prices have hit new lows this year," Steve writes. Before you invest – in commodities or anything else – you need to know how one simple step can boost your results. Read more here. |
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THIS EMERGING MARKET IS PICKING UP STEAM
Today, we see companies benefiting in a high-growth economy... Longtime readers know emerging markets have a history of staging major booms. Because of their growth potential, they can offer massive gains that are rare in developed countries. As Steve puts it, "When emerging markets are hot, you simply HAVE to be on board." We can see this at work in Singapore today... The iShares MSCI Singapore Capped Fund (EWS) holds 27 large- to medium-sized companies in sectors like banking, telecommunications, and real estate. These stocks tend to soar when Singapore's economy booms... And today, it's thriving. The country's third-quarter gross domestic product grew 5.2% from the year before (crushing the U.S.'s growth of 3.3%.) And Singapore's Ministry of Trade and Industry boosted its forecast for next year. As you can see in the chart below, shares of EWS are trading at new highs after a strong rally. The fund is up nearly 23% over the past year. In short, this emerging market is heating up today... |
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| How to profit from the next demand-driven boom... Like uranium, after years of oversupply, this commodity's fundamentals have turned around. Much higher prices are likely. Here's one way our commodity team recommends taking advantage of it... Click here to get immediate access. |
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